The public insurance adjusters at Tutwiler & Associates work extremely hard everyday to prove why our industry profession is so valuable to policyholders throughout the United States. We work with potential clients to guide them in their decision making and impress them with our knowledge while they take time to decide their best course of action. We strive to educate policyholders after a serious loss when they are the most vulnerable.  Case in point involves a massive electrical fire that occurred at a condominium on August, 2015 in Sarasota, FL. 

With each major fire that we see, there was significant fire, water and smoke damage to the building structure.  Sadly, one person perished in the blaze, who happened to serve on the condo’s Board of Directors.  We have seen this happen on two major fires this year, which could have likely been prevented by installing, routinely checking and changing smoke detector batteries.  The American Red Cross is very active in this area and they often canvas the streets and neighborhoods to pass out thousands of free smoke detectors to thousands of people throughout the year.    

In today’s ever changing insurance environment, an unfortunate situation occurs when a major fire hits the mainstream media. Countless contractors and restoration firms desperate for insurance work bombard the scene while the fire burns, offering all types of promises and sales pitches. This only adds to the confusion and stress for property owners and tenants who have just lost everything they have worked for their entire professional lives.  Property owners need to realize that it is in their best interest to stay away from the majority of these people until the Condo Board of Directors has time to think, digest the situation and put a coordinated plan of action in place before signing any paperwork or contract for services while they are under duress. Unfortunately, in this case, that did not happen.  

After reporting the claim to the Master Association’s Insurance Company, the insurer advised the Condo Board of Directors to do nothing, advising that everything would be taken care of.  It is no secret that following a loss it is the responsibility and duty of the insured policyholder to “mitigate their damage to prevent any further damage from occurring.  An example of this would be to tarp the roof so the next rainstorm cannot cause additional damage the building.  However, the carrier advised that they would send their preferred contractor (a local restoration company) who would perform that task and take care of everything else.  However, the Condo Board was not comfortable using the insurance companies contractor, first because they did not know them and second because they have always used a specific contractor in the past whom they trusted and were very comfortable with.  This created an adversarial situation because the insurance company wanted to send their contractor of choice who they have pre-vetted and know will keep the repair costs and claim settlement costs to a minimum.  On the other hand, the condo Board of Directors had a trusted contractor that they felt would look after the Association’s best interest and felt they had a right to pick the contractor of their choice under their insurance contract. The stage was set and the battles began.  

The contractor sent out on behalf of the insurance company (which just so happens to be one of Florida’s largest writers of property insurance) wrote a repair estimate, which totaled roughly $293,000.  The Associations contractor saw things much differently and wrote a repair estimate which totaled roughly $750,000.  For many months no agreements were reached and the two parties were at a standstill.  Not only were the parties at a stalemate regarding the value of the loss and damages but they also faced another very big issue – discussing coverage.  You see, in the State of Florida contractors are only allowed to discuss repair estimates amongst themselves. But when it comes to separating Master Association damage versus Unit Owner damages as outlined and in accordance with the association’s governing documents and Florida Statutes Chapter 718.111(11) Insurance they essentially are discussing coverage.  

This is a big deal simply because according to Florida law, a contractor cannot act in any capacity as an insurance adjuster and they cannot negotiate on the behalf of the condo association or they could be subject to arrest and may be charged with a third-degree felony as provided by Section 626.8738, Florida Statutes.  While a contractor may tell you that he also holds a public adjuster license, they cannot act as both the contractor and public adjuster on the same claim since it represents a conflict of interest.  Therefore, the condo must have some board member or members appointed to step-up to handle this function as it is their fiduciary duty to do the right thing that is in the best interest of their condo members.  This is a very difficult and time-consuming task and in some past cases may prove to be very costly, especially if the Board of Directors makes a mistake during the handling of the claim.  

When a Condo Board tells us they want to handle the claim themselves we recommend that all board members have a separate insurance policy that covers the Board for handling an insurance claim.  This policy, otherwise known as an Errors & Omissions Policy should have adequate coverage and enough limits in the event mistakes are made and condo members take legal action against the Board of Directors.  Hopefully this will never happen but this too is becoming a recurring theme and it is a big and potentially costly deal.  A prime example of an insurance claim gone wrong was in Naples, Florida following Hurricane Wilma.  The resulting damage caused anyone who lived in an 18-story waterfront high-rise off Gulf Shore Boulevard at the time of the storm (whether they had damage or not to their condo) with a more than $140,000 assessment!  After that, there were 116 unit owners who got together and filed a class-action lawsuit against the Board of Directors, their attorney and the association’s public adjuster seeking damages for the claim which resulted in the building’s insurer paying nothing.

But getting back to the above, there was a $457,000 gap that was unresolved and going nowhere fast.  Finally the appraisal process was invoked and the Association after two separate recommendations took a vote and decided to hire public adjuster and property loss appraiser, Mr. Rick Tutwiler, P.C.L.S. to handle the appraisal process on the Board of Director’s behalf.  

Mr. Tutwiler was hired more than three months post-loss and quickly took control of the situation.  Specifically, he coordinated multiple inspections on-site with his firms building consultants and prepared a detailed Repair Estimate and Appraisal Binder.  Once the Board approved Mr. Tutwiler’s work, he was given the green light to start a dialogue with the insurance company’s hired Appraiser and the two parties coordinated a joint inspection of the fire loss and resulting damages.  

While the holiday season caused for a minimal delay, Mr. Tutwiler took advantage of the first opportunity and coordinated a lunch at the Windstorm Insurance Network’s annual conference in Orlando, Florida where the two parties sat down and hashed out a settlement.  

In the end, Mr. Tutwiler negotiated a final settlement in the amount of $700,000 which was approved and accepted the Board of Directors.  The settlement represented an increase of 139% or $407,000 in new money. In addition, he was able to save the Condo Association additional money by negotiating a favorable resolution without the use of an Umpire.

This exact type of situation is becoming more frequent as insurance companies are aligning with their “preferred contractors” to help them battle other contractors who are trying to do a good job for their client.  It appears the goal is to reduce claim payments and costs.  This coupled with the fact that contractors cannot discuss coverage or negotiate claims often sets the stage for a nightmare dispute and a situation that could have potentially cost the association and Board of Directors much more in legal fees and costs that they did not have adequate coverage for.